Rebel forces claim to have routed most of Muammar Gaddafi's troops in the Libyan oil town of Brega - in the biggest boost for the insurgents' military campaign in eastern Libya in weeks.
Brega, about 750km east of Tripoli, is the site of a strategic oil terminal.
The city has changed hands several times in the back-and-forth fighting along Libya's Mediterranean coast since the rebellion began in February.
Rebels say taking it back will be a tipping point in the conflict on the eastern front.
More than 30 people on both sides have been reported killed in fighting over the weekend.
After weeks of stalemate, Gaddafi is refusing to step down despite the five-month-old rebellion against his rule, a campaign of NATO air strikes, and the defections of members of his inner circle.
However, reports have circulated that the Libyan leader is seeking a negotiated way out of the crisis, but in a speech on Saturday he described the rebels as worthless traitors and rejected suggestions that he was about to leave the country.
The rebel fighters have encircled Brega, rebel spokesman Shamsiddin Abdulmolah said, but its streets are strewn with landmines, making it hard to secure full control of the area.
'The main body (of Gaddafi's forces) retreated to Ras Lanuf', which lies to the west, Abdulmolah said by telephone.
The bulk of the rebels' forces were now past Brega and were heading west towards the towns of Bishr and Ugayla, Abdulmolah added.
While rebel fighters have been making gains in eastern and western Libya in recent days, Russia criticised the US and other countries for recognising the rebel leadership as the legitimate government of Libya.
'Those who declare recognition stand fully on the side of one political force in a civil war,' Russian Foreign Minister Sergei Lavrov told reporters in Moscow.
US Secretary of State Hillary Clinton announced US recognition of the rebels on Friday, while in Turkey for a meeting of an international contact group on Libya. It is a major diplomatic step that could unblock billions of dollars in frozen Libyan funds.
Russia and China have taken a softer line towards Gaddafi, and neither attended the contact group meeting.
